A personal installment loan lets you borrow a fixed sum of money and repay the balance over time. Most installment loans have a fixed-interest rate, which means you’ll pay the same amount each month, until the loan is repaid. Personal loans, auto loans, debt consolidation loans and even “buy now, pay later” loans are all types of installment loans.
We’ve evaluated major installment loan providers and highlighted the best options below. We’ll update this list regularly as terms change and new loan products are released.
Note: All the starting annual percentage rates, or APRs, here are based on a borrower having an excellent credit score of 800 or above. If your credit score is lower than that, you may be approved at a higher rate. The APRs listed are current as of January 9, 2023.
How do installment loans work?
Installment loans give you a lump sum of money, usually with a fixed interest rate, that you repay in fixed monthly payments, or installments. Most installment loans have terms ranging from several months to several years..
How to choose the best lender for an installment loan
Installment loan lenders may offer many of the same types of loans and benefits. To find the right installment loan provider for you, shop different lenders and compare annual percentage rates, fees, loan terms, security and other benefits.
The annual percentage rate, or APR, is the total amount of interest and additional fees a lender charges you in exchange for borrowing money. The lower your APR, the less you’ll pay in total interest over the life of your loan. Compare APR offers across lenders to find which company will offer you the lowest rate. (Note: Your interest rate and APR are different. Your APR is often higher than your interest rate, since it contains your interest rate plus other fees.)
Charging fees are a major way for lenders to make money (in addition to charging interest on a loan). While some fees are rolled into your APR, some lenders charge additional fees, like origination fees or processing fees, that are rolled into your loan’s balance.Look for lenders with no or few fees, lenders that charge the lowest fee amounts or companies with more lenient fee structures. For example, some lenders don’t charge late fees or give you a grace period to make a payment before a late fee is charged.
Variation in repayment terms
Lenders offer different repayment terms -- the amount of time you have to fully pay off your loan -- for installment loans. A shorter loan term can help you save money on interest overall, but may require higher monthly payments. A longer loan term can help lower your monthly payments, but may result in paying more interest over the lifetime of a loan. Find a lender that offers flexible loan terms to fit your needs.
Keeping your financial and personal information safe is critical, especially when applying for a loan online. The best lenders use encryption to keep your information safe. When exploring lenders, check to see if they’ve had recent data breaches, and research how they protect your personal and financial information. If you don’t feel like your lender keeps your information safe and secure, you might not want to do business with them.
Additional lender benefits
Many lenders have competing interest rates, fees and repayment terms. But some lenders offer other extra features that can help reduce your monthly costs or provide credit boosting benefits.
For example, a lender may offer a discount -- usually a percentage off of your rate -- when you enroll in autopay and have payments automatically deducted from your bank account each month. Some lenders also offer a co-signer release option, which lets you remove a co-signer from your account after you’ve made a set number of on-time monthly payments. Another benefit a lender might offer is approving you for a loan without a co-signer, even if you have a lower credit score.
Types of personal installment loans
Most installment loans have a fixed-interest rate, which means your interest rate will never change and you’ll make a set payment each month. Here are a few different types of individual installment loans you can apply for, depending on your needs:
A personal loan is money borrowed from a bank or financial lender that you can use to consolidate debt, finance a home improvement project or gain access to a stream of capital. You can use a personal loan for many purposes, but lenders may restrict you from using your funds to pay off student debt or higher education costs with this type of loan. Personal loans are often a more affordable alternative to credit cards, with generally lower interest rates and more flexible repayment terms.
Check out CNET’s picks for best personal loans.
Debt consolidation loans
If you have high-interest credit card debt, past-due medical bills or another type of personal debt, a debt consolidation loan lets you combine several credit accounts into one new personal loan. Consolidating multiple monthly accounts into one fixed payment can make your debt easier to manage -- and you may be able to lock in a lower interest rate than you currently pay.
Check out CNET’s picks for best debt consolidation loans.
Auto loans can help you buy an old or new vehicle. Unlike most personal and debt consolidation loans, an auto loan is a secured loan, which means your vehicle is used as the loan’s collateral. So, if you fail to make the necessary payments and your loan defaults, or falls into bad standing, the lender can take your vehicle to compensate for its loss.
Check out CNET’s picks for best car loans.
Buy now, pay later plans
This popular alternative to credit cards lets you buy products or services now and repay the balance over a set period of time. Many BNPL apps offer payment plans that span six or eight weeks and are interest-free, though many charge late fees.
BNPL apps may also offer payment plans that span months or years. These longer installment plans usually charge interest.
Check out CNET’s picks for best buy now, pay later apps.
Other types of installment loans
There are many other types of installment loans, including a student loan and a mortgage, or home loan. Student loans can have fixed or variable-interest rates and may be financed by the federal government or a private lender. A mortgage, or home loan, can also have a fixed or variable interest rate, and is secured by the house you are purchasing.
Boosts your credit score. Over time, making on-time payments can help improve your credit score.
May require collateral. Secured installment loans, like an auto loan, require an asset to serve as collateral. While the car you’re buying helps secure your loan, this also means it can be repossessed if you miss payments or default on your loan.
How to get the best rates
The best interest rates are reserved for borrowers with high credit scores and clean credit histories. Sometimes, the best interest rate you find from one lender might not be the lowest interest rate that’s available to you. It’s important to compare interest rates across different lenders before applying for an installment loan.
How to qualify and apply for an installment loan
1. Review your finances. Figure out how much money you need to borrow and determine how much you can afford to pay toward a loan each month. You can use an APR calculator to see how different loan APRs and terms could lower or raise your monthly payment.
2. Check your credit score. Before applying for an installment loan, check your credit report to make sure it’s free of errors, which can lower your credit score. You should dispute any errors and have them removed from your credit report before applying for a loan. If your score is lower than a lender requires, you may want to work on your credit before applying for a loan.
3. Get prequalified. You can typically view lender rates by getting prequalified by a lender. You’ll share some financial and personal information -- like your legal name, income and credit score -- so you can view current loan terms and interest rates. Prequalification doesn’t impact your credit score, and it also does not guarantee approval at the rates you view.
4. Compare lender offers. Next, review loan rates and terms across multiple lenders to find the lender with the lowest rate, best loan term and the fewest fees.
5. Apply for the loan. Once you’ve decided on a lender, it’s time to apply for your installment loan. You may need to provide financial documents like paystubs, bank account statements or tax returns during this step. The lender will then run a hard inquiry on your credit profile, which may temporarily lower your credit score.